Have you heard about the new First Time Home Buyer’s Incentive?
It’s a fantastic option to help lower your monthly payments and make a new home more affordable. With up to 10% of your purchase price available, it’s worth looking into!
Here’s everything you need to know…
$1.25 Billion Available
For many Canadians, especially young people and first-time buyers, finding an affordable place to call home is a challenge. This initiative is designed to help young Canadians access homeownership in a fiscally responsible and affordable way. Statistically, this is the demographic group with the lowest percentage of homeownership.
How Does It Work?
The incentive enables first-time homebuyers to reduce their monthly mortgage payment without increasing their down payment. The Incentive is not interest-bearing and does not require ongoing repayments. By obtaining the Incentive, the borrower may not have to save as much of a down payment to be able to afford the payments associated with the mortgage.
10% Given For a New Home
When you choose to build a new home, you may qualify for up to 10% of your home purchase price, rather than 5% for existing homes. To receive this, you must have a combined income of less than $120,000, your down payment in full and your total borrowing must not exceed $480,000.
Open November 1st, 2019
If you are purchasing a new home, with a closing date after Nov 1st, 2019 you can apply for this incentive, even after a purchase and sale agreement is in place. You must meet the eligibility and have your 5% down payment on the total purchase price of the home after the incentive amount has been given.
Who Can Apply?
Canadian citizens, permanent residents, and non-permanent residents who are legally authorized to work in Canada. You must also qualify as a first-time homebuyer:
- You have never purchased a home before.
- You’ve recently experienced a breakdown of a marriage or common-law partnership.
- In the last 4 years, you did not occupy a home that you or your current spouse or common-law partner owned.
Can It Be Used For A be Two Apartment Home?
Qualifying homes can include 1 to 4 units, as long as they are to be owner-occupied. These can be single-family homes, semi-detached, duplex, triplex, fourplex, townhouses, and condominium units. The property must be located in Canada and must be suitable and available for full-time, year-round occupancy.
What Is A Shared Equity Mortgage?
The Incentive is a second mortgage on the title of the property. It is a shared equity mortgage, where the government shares in the upside and downside of the property value.
When Is It Repaid?
You have to repay the incentive after 25 years or if the property is sold, whichever happens first. You can repay the Incentive at any time in full without a pre-payment penalty. The repayment of the Incentive is based on the property’s fair market value. If your home value increases, your payback would be 10% of the current value. If your property value goes down, you are still responsible for repaying the shared equity mortgage based on the current home value at the time of repayment. You can still switch lenders of your first mortgage at any time, providing the property is not sold.
Mortgage Loan Insurance
The first mortgage you use must be eligible for mortgage loan insurance through either Canada Guaranty, CMHC or Genworth. The first mortgage must be greater than 80% of the value of the property and is subject to a mortgage loan insurance premium. It’s an insurance that protects a lender against default on a mortgage. Mortgage loan insurance is required for any mortgage where the down payment is less than 20% of the purchase price or market value of a home.
Traditional down payment comes from the borrower’s own resources and may include savings, withdrawal/collapse of a registered retirement savings plan (RRSP) or a non-repayable financial gift from a relative.
How Do You Apply?
Determine your eligibility by visiting: placetocallhome.ca
Visit the “Apply” section of the website. Review the details and select the incentive that is right for you.
Read, print and sign the application documents in the resources section and take them to your lender. All of the application submissions will be completed by your lender. Once approved, you then notify your solicitor and call the 1-800 number to activate.
Are There Any Costs?
Your lawyer is registering and closing two mortgages, so you may be charged higher fees when you purchase the home. To repay your incentive, you may need to have an appraisal done to determine the fair market value of your home.
For more information visit: placetocallhome.ca